Clean energy investment is extending its lead over fossil fuels, boosted by energy security strengths
Global investment in clean energy is on course to rise to USD1.7-trillion in 2023, with solar set to eclipse oil production for the first time. Investment in clean energy technologies is significantly outpacing spending on fossil fuels as affordability and security concerns triggered by the global energy crisis strengthen the momentum behind more sustainable options, according to a new IEA report. About USD2.8-trillion is set to be invested globally in energy in 2023, of which more than USD1.7-trillion is expected to go to clean technologies – including renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements and heat pumps – according to the IEA’s latest World Energy Investment report. The remainder, slightly more than USD1-trillion, is going to coal, gas and oil. Annual clean energy investment is expected to rise by 24% between 2021 and 2023, driven by renewables and electric vehicles, compared with a 15% rise in fossil fuel investment over the same period. But more than 90% of this increase comes from advanced economies and China, presenting a serious risk of new dividing lines in global energy if clean energy transitions do not pick up elsewhere.
AfDB Group to unlock significant additional resources for low income countries – Dr Adesina
The Board of Governors of the African Development Bank (AfDB) Group has approved management’s request to leverage the equity of the African Development Fund (ADF), to mobilise more resources on the capital markets. The fund is the bank’s concessional lending window. “When fully implemented, the bank group could unlock up to USD27-billion to help low-income and fragile states,” AfDB president Dr Akinwumi Adesina said recently. “What this means is that when this is launched, we can raise an additional USD4-billion or even more per cycle [every three years] for these least developed low-income countries,” Dr Adesina said during the official closing ceremony of the AfDB’s 2023 Annual Meetings in Sharm El-Sheikh, Egypt. With nearly half its recipient countries classified as fragile states, the ADF contributes to poverty reduction and socioeconomic development in those countries by providing concessional funding for their projects and programmes. Nine of the 10 world’s most vulnerable countries to climate change are in sub-Saharan Africa and rely on the resources of the fund.
African economies grapple with funding hiccups as bond issuance drops 70%
African countries are struggling to raise funding after attempts to borrow from international capital markets were scuttled by rising interest rates and depreciating currencies, which have pushed debt repayments through the roof. A new report by the African Export-Import Bank (Afreximbank) shows that bond issuance by African countries declined by 70% in 2022, with some countries such as Kenya compelled to cancel planned Eurobond issues. According to the report titled Africa’s 2023 Growth Prospects: Securing growth resilience in a polycrisis world, only three African nations – Angola, Nigeria and South Africa – successfully accessed international capital markets in 2022, raising USD6-billion, down from nine countries that raised almost USD20-billion in 2021. “Even though the sovereign debt of African countries is extremely low, they are overburdened by default-driven borrowing rates, which in a rising interest rate environment has pushed several into debt distress,” the report says. Tightening global financial conditions, the report notes, resulted in disproportionate increases in risk spreads and large-scale capital flow reversals, causing most African countries to be shut out of capital markets and, for those that defended their currency, it drained hard-earned foreign exchange reserves.
Source: The EastAfrican
Five AfDB regional member countries set to join African Development Fund replenishment
Five African Development Bank (AfDB) governors have signed an agreement committing to contribute at least USD1-million to the replenishment of the African Development Fund (ADF), the concessional window of the AfDB Group. Under the self-initiated agreement, the five-member constituency – The Gambia, Ghana, Liberia, Sierra Leone, and Sudan – will contribute to the ADF from its next replenishment cycle in 2025. With nearly half its client countries as fragile states, the ADF contributes to poverty reduction and economic and social development in least-developed African countries by providing concessional funding for projects and programmes. The signing took place on the sidelines of the AfDB Group’s 2023 Annual Meetings in the Egyptian resort city of Sharm El-Sheikh. The agreement highlights domestic revenue mobilisation as a priority. It requires member countries to allocate at least USD3-million yearly to prop up internal revenue flows, which in turn, will unlock more funds for accelerated development. Another priority area is expanding local private sector-led economic growth through support for small businesses, it said.
Lobby group wants 40% of state business to go to private sector
Speaking in Midrand, South Africa, at a two-day workshop on Accelerating the African Continental Free Trade Area (AfCFTA) and the significance of the Pan-African Parliament (PAP), the Africa Business Council (AfBC) president Dr Amany Asfour said the implementation of the AfCFTA is dependent on the private sector. Dr Asfour underscored the need to have incentives for African investors rather than for multinationals and urged PAP to push for legislation in domestic parliaments that will make it mandatory to have 40% of all government procurement given to the local private sector. She added that even as Africa maps its resources, mechanisms and strategies must be quickly put in place to address the issue of value addition. She gave the example of the Democratic Republic of the Congo (DRC) and Zambia, which host the minerals that constitute raw materials for batteries for electric vehicles whose demand by 2030 will have hit 200 million units. Dr Asfour emphasised the need for a competitive, borderless, innovative Africa for trade and industrialisation to be realised “because [the] AfCFTA without industrialisation and investment will remain a pipedream”.
Source: The EastAfrican
Africa needs to digitalise its borders to stimulate intra-continental trade and travel
International air transport industry-owned multinational information technology company SITA (not to be confused with South Africa’s State Information Technology Agency) senior vice president, SITA at Borders, Jeremy Springall has urged African countries to digitalise their border management systems. This would make it easier for people and goods to cross their borders while allowing them to protect themselves from crime, trafficking, terrorism and pandemics, yet preserving the data privacy of travellers. “Africa’s immense potential to become a global powerhouse is undeniable,” he highlighted. “It has all the ingredients including a market of 1.2-billion consumers (rising to 1.7-billion by 2030) and a combined [GDP] worth USD2.5-trillion.” Yet, despite African countries all having recognised the benefits of the African Union’s (AU) flagship African Continental Free Trade Area (AfCFTA), Single African Air Transport Market and Free Movement of Persons Protocol programmes, these all remained far from full implementation. “A key advantage for Africa is that it faces fewer legacy challenges in the digital space and in many ways, it can move faster. The digital transformation of borders will be inevitable if the continent is to achieve its ambition.”
Source: Engineering News
UNECA’s Country Business Index – a tool to enhance private sector’s role in AfCFTA implementation
Despite the African Continental Free Trade Area’s (AfCFTA) premise of boosting trade in Africa, there are mixed perceptions of its benefits within the private sector across the continent, according to an index launched by the United Nations Economic Commission for Africa (UNECA). To better understand how African businesses are approaching the AfCFTA and how it can best support the private sector through trade, UNECA developed the AfCFTA Country Business Index (ACBI) with the financial support of the European Union (EU). The index enables relevant policymakers to identify bottlenecks in intra-African trade at a country level, which identifies the barriers impeding effective AfCFTA implementation from the perspective of the private sector. Recently, UNECA held an Expert Group Meeting (EGM) to present the methodology and findings of the index to inform the implementation of the AfCFTA. Research by UNECA shows that industry and services, mainly transport and tourism, are expected to make the most gains from the AfCFTA. The ACBI offers useful insights on how African businesses are perceiving trade and doing business under the AfCFTA. The ACBI reports showed results from Angola, Côte d’Ivoire, the Democratic Republic of the Congo, Egypt, Gabon, Kenya, Morocco, Namibia, Nigeria, Rwanda, Senegal, South Africa, and Tunisia.
National consultations for drafting the constitution for the EAC Political Confederation concludes in Kenya
National consultations for drafting the constitution for the proposed East African Community (EAC) Political Confederation recently concluded in Machakos County, Kenya. The 20-day consultations launched in Mombasa on 9 May 2023 saw the Committee of Constitutional Experts for Drafting the EAC Political Federation Constitution hold consultations with civil society, local leaders, opinion leaders and the business community, among other stakeholders, to seek their views on what kind of a political confederation they would desire for the EAC. The consultations were done in various areas across the country including Kisumu, Kakamega, Eldoret, Nakuru, Nyeri, Embu, Garissa and Nairobi. The objectives of the national consultations are to enhance awareness on the ongoing constitution-making process for transforming the EAC into a political confederation; obtain stakeholders’ views on their interests and key issues to inform the drafting of a model confederation and subsequently a confederal constitution in line with the principle of a people-centred regional community; and prepare the public in general to give their inputs into the draft constitution once it is drafted.
Joint media release: SACU members sign mutual recognition arrangement
Accredited traders in Botswana, Eswatini, Lesotho, Namibia and South Africa will benefit from lower trade costs and quicker turn-around times for imports and exports, because of a Mutual Recognition Arrangement signed on Wednesday, 31 May 2023, by the five member states of the Southern African Customs Union (SACU). The Heads of Revenue Administrations in Botswana, Eswatini, Lesotho, Namibia and South Africa, have agreed to recognise each other's importers and exporters who have been granted the status of an Authorised Economic Operator (AEO). Traders who are AEOs across the SACU region will benefit from fast-tracked controls and reduced administration costs for customs clearance. The AEO programme is a flagship customs-business partnership. It benefits both parties because it offers an opportunity for customs authorities to share its compliance and security responsibilities with the private sector and at the same time, rewards them with several trade facilitation benefits. Partnership programmes of this nature with trade will allow revenue administrations to achieve more with less effort, with the goal of ensuring sustainable and long-term voluntary compliance through incentives.
BOAD and Africa50 to co-finance sustainable infrastructure
A new partnership is being set up to finance climate-resilient infrastructure in West Africa. It is being set up by the West African Development Bank (BOAD) and Africa50, an investment platform created by African governments and the African Development Bank (AfDB) to bridge the infrastructure financing gap in Africa. The partnership agreement was signed on the sidelines of the 58th General Assembly of the AfDB Group, which recently concluded in Egypt. Through this partnership, the two institutions intend to mobilise financing from institutional investors to support the development of green infrastructure. BOAD and Africa50 will develop bankable projects, “including climate-resilient infrastructure, to support sustainable growth and the transition of African countries to carbon neutrality”, says Africa50. According to the Casablanca, Morocco-based investment platform, the collaboration aims to help bridge the infrastructure financing gap in Africa, “by providing timely and efficient financing to meet the continent’s growing development needs”, says Africa50. In recent years, Africa50 has established itself as a key player in infrastructure development, particularly in the energy sector.
Source: AFRIK 21
IMF Executive Board approves USD3.5-billion EFF and ECF for Côte d’Ivoire
The Executive Board of the International Monetary Fund (IMF) approved 40-month arrangements under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) for Côte d’Ivoire in the amount of SDR2 601.6-million (equivalent to 400% of quota or about USD3.5-billion). The programme is consistent with the authorities’ 2021-25 National Development Plan (NDP) and aims to maintain macroeconomic stability in the near term while laying the foundation for deeper economic transformation towards upper middle-income status over the medium term. The programme will also help Côte d’Ivoire raise its contribution to the regional international reserves pool. The executive board’s decision enables an immediate disbursement of SDR371.7-million (USD495.4-million), which the Ivorian authorities intend to use for budget support. Hit by triple shocks, namely the pandemic, the adverse spillovers of Russia’s war in Ukraine, and the global monetary tightening, Côte d’Ivoire faces growing macroeconomic imbalances. The authorities are committed to pursue their agenda to promote private sector led and inclusive growth, as well as to strengthen fiscal consolidation efforts.
IMF staff reach staff level agreement on second review of the ECF arrangement with Guinea-Bissau
A team from the International Monetary Fund (IMF) led by Jose Gijon, mission chief for Guinea-Bissau, held virtual meetings from 17-22 May 2023, and meetings in Bissau from 23-30 May 2023, to discuss the assessment of the second review of the Extended Credit Facility (ECF) arrangement. The initial arrangement was approved for a total amount of SDR28.4-million (about USD37.9-million) on 30 January 2023. At the conclusion of the mission, Mr Gijon issued the following statement, in part: “The mission team reached staff level agreement with the authorities on economic and financial policies that could support the approval of the second review of the ECF-supported programme. This agreement is subject to approval by the IMF Executive Board, which is tentatively scheduled for end-August 2023. Upon completion of the executive board review, Guinea-Bissau would have additional access to SDR2.37-million (around USD3.16-million), bringing the total IMF financial support under the arrangement to SDR7.11-million (about USD9.48-million). Estimated economic growth has moderated in 2022 to 4.2%. The surge in commodity prices associated with the war in Ukraine, especially in food and fuel, brought average inflation to 7.9% and contributed to the widening of the current account deficit.”
Expanding distribution grid with more substations and power lines
Kenya Power and Lighting Company PLC (Kenya Power) is to construct new substations and power lines in order to strengthen the electricity distribution network. The company has announced that it plans to spend around USD72-million (KES10-billion) during the financial year commencing July 2023 on these projects. Kenya has an installed electricity capacity of 3 321 megawatts (MW) against a peak demand of 2 132 MW. During off-peak, the demand drops to about 1 100 MW. “This creates a good opportunity for high-capacity electric vehicle charging which utilises the available unused power. “Kenya Power has been at the forefront in championing the adoption of electric vehicles,” the company said in a press statement. At present, Kenya Power has 9 million clients. Kenya Power’s managing director and CEO Joseph Siror said the investment is in line with the company’s strategy to strengthen the network. “Strategic grid investments will provide sufficient capacity for the anticipated increase in energy demand resulting from new growth areas such as e-mobility and clean cooking as envisioned by the utility,” Siror said.
Source: ESI Africa
Kenya taps USD1-billion support for fiscal consolidation efforts and other key policy reforms
The World Bank Group Board of Directors approved a Development Policy Operation (DPO) for USD1-billion to provide low-cost budget financing along with support to key policy and institutional reforms for Kenya’s near-term objectives of fiscal consolidation as well as it’s long-term goal of green and inclusive growth. The DPO will support Kenya to institute a raft of policy reforms across three pillars. The first bundle of policy reforms will target the creation of fiscal space in a sustainable and equitable manner, including revenue and expenditure measures to support fiscal consolidation, strengthening the debt management framework, and protecting pro-poor expenditures. These will be augmented by a second set of reforms that improve competitiveness to boost agricultural exports, which is both a powerhouse sector where Kenya has a clear comparative advantage and the sector employing most of Kenya’s poor. Transparency and accountability will be strengthened through a third wave of reforms to improve governance and financial inclusion for private sector driven growth by strengthening the confidence of the private sector in the government’s commitment to a level playing field.
Source: World Bank
Kenya to scrap visa fees for African traders
President William Ruto has announced plans to remove visa requirements for African nationals travelling to Kenya for business as a first major step to remove barriers to intra-Africa trade. Dr Ruto recently apologised to public and private sector leaders attending a forum on the African Continental Free Trade Area (AfCFTA) in Nairobi for the visa requirements. “My minister [Cabinet Secretary of the Ministry of Investments, Trade and Industry, Moses Kuria] has informed me that somehow some of our officials made you pay visas to come home and asked me to apologise, which I do. When one comes home, they do not pay to come home,” he told the forum, narrating the human evolution story in Turkana, Kenya. “I want to promise you that this might be the last time you are looking for a visa to come to Kenya because of two reasons. Number one, because this is home and number two, we support wholeheartedly the AfCFTA. We must remove any impediments to the movement of people around our continent.” The announcement was a continuation of Kenya’s policy for the integration of Africa.
Source: Business Daily Africa
Staff concluding statement of the 2023 Article IV mission
An International Monetary Fund (IMF) team led by Mr Aqib Aslam held meetings in Maseru with the authorities of Lesotho and other counterparts from the public and private sectors and civil society from 8-19 May 2023, as part of the 2023 Article IV consultation. Discussions focused on fiscal and monetary policies to ensure macroeconomic stability and debt sustainability and far-reaching structural reforms needed to create jobs, reduce poverty and inequality, and facilitate the transition to a private-sector-led growth. The authorities have set out a bold reform agenda, underpinned by a vision of a smaller but more efficient public sector with a high quality of service delivery that provides space for the private sector to grow. The election outcome–a near Parliamentary majority–provides a vital window of economic and political opportunity. A well-paced and focused sequence of reforms–together with broad capacity development–can help ensure a durable fiscal consolidation, which can rebalance incentives and help shift the economy to a higher growth path.
IMF Executive Board concludes 2023 Article IV consultation with Mali
The Executive Board of the International Monetary Fund (IMF) concluded the 2023 Article IV consultation with Mali and endorsed the staff appraisal. Mali’s economy has been hit by multiple shocks since 2020 but remained resilient in 2022 amid high inflation. Real GDP growth increased from 3.1% in 2021 to 3.7% in 2022, despite elevated security and socio-political challenges, regional sanctions in the first half of 2022 and a high incidence of food insecurity. Growth is projected to rebound to over 5% in 2023 and 2024, assuming strong agricultural and gold output. However, the economic outlook is subject to significant downside risks. They include a worsening security situation, potential election delays, volatile international commodity prices, tighter global financial conditions, and climate risks. Headline inflation reached 10% in 2022, reflecting energy and food price shocks due to Russia’s war in Ukraine and regional sanctions, but is projected to come down to 5% in 2023 and to 2% in 2024 as global energy and food prices decline.
The growing tide of ESG litigation: What's in store for Namibia?
In recent years, there has been a significant global spike in litigation relating to a variety of Environmental, Social and Governance (ESG) issues. Specifically, the institution of legal challenges geared towards climate change mitigation against oil giants or high carbon-emitting industries has been on the rise. The legal landscape is seeing an uptick in cases where litigants successfully argue that state entities and corporations have a duty to mitigate climate change, under the umbrella of human rights principles. This implies an expanding understanding that human rights protection, current and future, entails defending all individuals from harmful environmental impacts. Namibia has committed, both domestically and internationally to the implementation of climate change mitigation strategies. As observed with the ESG and climate litigation cases in other jurisdictions, such commitments have underpinned litigants’ cases in holding states and corporate actors accountable for their actions (or inaction) in contributing to the climate crisis. Namibia has implemented a national framework that provides guiding principles for the adoption of mitigating measures against predicted climate change, and the impacts thereof on its population and industries.
Hydroelectric project adds 700 MW to national grid
An additional 700 megawatts (MW) has been added to Nigeria’s national grid with the completion of the Zungeru hydroelectric power project. In a recent announcement, the country’s Federal Ministry of Power said the additional power supply would “significantly fill the gap in the nation’s electricity demands.” The plant is located on the Kaduna River in the State of Niger, approximately 150 km north-west of Abuja. It is the largest hydroelectric dam to be built in Nigeria since the commissioning of the Kainji dam in 1968. According to the project’s consultants – Decrown West Africa Company Limited – it is designed to “generate 2 630 gigawatt hours (GWh) energy at reservoir FSL 230 and flow rate of 880 cubic metres per second (m3/sec), total installed capacity of 700 MW with a plant factor of 0.33.” “The main features of the project include a composite dam with a roller compacted concrete dam (RCC), rock-fill dams, diversion work, spillway and plunge pool, power intake and penstocks, hydroelectric power plant, tail race channel, switchyards and 330/132 kilovolt (KV) transmission lines evacuating power to the existing grid connecting Jebba and Shiroro 330 KV power plants and Tegina 132 KV substation, respectively.”
Source: ESI Africa
IMF Executive Board approves USD56-million EFF arrangement and USD46-million under the Resilience and Sustainability Facility for Seychelles
The Executive Board of the International Monetary Fund (IMF) has approved for Seychelles a three-year arrangement under the Extended Fund Facility (EFF), in the amount of SDR42.365-million (about USD56-million), and a three-year arrangement under the Resilience and Sustainability Facility (RSF), in the amount of SDR34.35-million (about USD46-million). The new EFF for Seychelles will replace the EFF approved on 29 July 2021. Under the 2021 EFF arrangement, the authorities satisfactorily implemented policies to restore macroeconomic stability in the face of multiple shocks, including the COVID-19 pandemic disruptions. All quantitative targets through end-December 2022 were met and all but one structural benchmark were met or implemented with delay. The new EFF will build on progress made under the 2021 EFF to strengthen macroeconomic stability while emphasising reforms to boost investments in human and physical capital to support inclusive growth. Efforts will also focus on strengthening fiscal and monetary policy frameworks.
UCC to invest UGX36-billion in expanding digital economy
Uganda Communications Commission (UCC) will use part of the UGX36-billion received from MTN under the Universal Service and Access Fund (USAF) to expand information and communications technology (ICT) services and deepen uptake of communication services across the country. Speaking at a ceremony to receive the money, Ms Irene Kaggwa Sewankambo, the UCC executive director, said part of the money will focus on promoting the digital economy and supporting micro, small and medium size enterprise sector players across board, including those operating informally. For that to make sense, she said issues of connectivity and inclusivity will have to be addressed, starting with digital literacy, connectivity and skilling. “We want them to have skills that will help them create employment for themselves and be part of the digital economy,” Ms Sewankambo said at a function to receive the funds that focus on bridging the digital divide in the country. All telecommunications companies in the country are required to pay a statutory 2% levy on their annual gross revenues to the fund administered by the UCC. The UGX36-billion, therefore, which is an equivalent of 2% of the telecommunications company’s annual gross revenue, is in fulfilment of the legal requirement.